§481X-4 Financial responsibility.

374 words·~2 min read·/hi/481x-4

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

§481X-4 Financial responsibility. A provider shall comply with the requirements under any one of the following paragraphs, and shall not be subject to any other financial security requirements under state law:

(1)The provider shall insure all service contracts under a contractual liability insurance policy issued by an insurer authorized to transact insurance in this State or issued pursuant to part III of article 8 of chapter 431;

(2)The provider shall:

(A)Maintain a funded reserve account for all obligations under service contracts issued and in force in this State. The reserves shall not be less than forty per cent of the gross consideration received from the sale of the service contract, less claims paid, for all in force contracts. The reserve account shall be subject to examination by the commissioner; and

(B)Place in trust with the commissioner, for all service contracts issued and in force in this State, a financial security deposit having a value that is the larger of $25,000 or five per cent of the gross consideration received, less claims paid for the sale of the service contracts. The financial security deposit shall consist of one of the following:

(i)A surety bond issued by an authorized surety;

(ii)Securities of the type eligible for deposit by authorized insurers in this State;

(iii)Cash;

(iv)A letter of credit issued by a qualified financial institution; or

(v)Another form of security authorized by the commissioner by rule; or

(3)The provider or its parent company shall:

(A)Maintain a net worth or stockholders' equity of at least $100,000,000; and

(B)Upon request, provide the commissioner with a copy of the provider's or the provider's parent company's most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission within the last calendar year, or if the company does not file with the Securities and Exchange Commission, a copy of the provider's or the provider's parent company's audited financial statements.

If the financial responsibility requirement under this paragraph is to be maintained by the provider's parent company, the parent company shall guarantee the provider's obligations under service contracts sold by the provider in this State. [L 2000, c 221, pt of §2; am L 2006, c 154, §45]